(Bloomberg) — The global economy faces growing risks to growth, even as the financial system is likely to weather the recent banking turmoil, economy ministers said after meeting in Washington this week.
“Growth prospects remain subdued and downside risks have increased,” according to a statement on Friday from Spanish Economy Minister Nadia Calvino, who chairs the International Monetary Fund’s (IMF) main advisory panel.
“Policymakers took swift action to build confidence in the banking system, which remains sound and resilient, supported by the reforms implemented after the 2008-2009 global financial crisis,” according to the statement.
The statement was issued as a statement by the president because the panel, the International Monetary and Financial Committee, was unable to reach full agreement on a joint statement amid disagreements over the language surrounding Russia’s invasion of Ukraine.
The 24-member committee, representing the fund’s 190 member countries, discusses issues of common concern to IMF members and advises the fund on the direction of its work.
The war “remains the most important source of uncertainty around the world,” Calvino said during a news conference on Friday in Washington. Still, she said, there is consensus among IMF member countries on different language about war and ensuring that the global financial safety net works for countries.
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The minister’s statement points out that the authorities “will address the gaps in data, supervision and regulation in the bank and, in particular, in the non-banking financial sectors, where it is important to advance further in the treatment of vulnerabilities”.
Earlier in the week, the IMF cut its global growth forecasts, warning of heightened uncertainty and risks as financial sector stress adds to pressures stemming from tighter monetary policy and Russia’s invasion of Ukraine.
The shocking failures of Silicon Valley Bank and Signature Bank last month and the collapse of Credit Suisse Group AG roiled markets and ignited concerns over financial stability, complicating the process for central banks as they seek to tame inflation while maintaining growth. and the health of the banking system.
Countries are scrambling to provide support and close a funding gap for the Poverty Reduction and Growth Trust, the IMF’s main vehicle for providing interest-free loans to lower-income countries, Managing Director Kristalina Georgieva said at the press conference Calvin’s side.
Countries will redouble efforts to achieve these targets at the fund’s annual meetings in Morocco in October, Calvino said in his statement.
The IMFC said it is committed to revising the quota or weighting of countries in the fund.
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US Treasury Secretary Janet Yellen, in her statement to the IMFC meeting, called for “a new quota formula that is fair and simple and primarily reflects the economic size of its member countries.”